Congressman Gaetz proposes Bitcoin tax payments bill

Congressman Matt Gaetz proposed a new bill on June 25 that seeks to facilitate the process for Bitcoin tax payments for federal income tax. The bill aims to modify the Internal Revenue Code of 1986. However, it will potentially open doors to integrating cryptocurrencies into government financial systems.

Key provisions of Bitcoin tax payment bill

The bill titled “Payment of Certain Taxes by Bitcoin” lays out a plan for the Treasury Secretary to establish a system for Bitcoin tax settlements. It includes converting received Bitcoins to dollars immediately and resolving non-tax issues involving taxpayers and financial entities. Additionally granting the Secretary the power to engage services for Bitcoin payment processing.

Gaetz praised the bill, considering it an important step toward fostering innovation and enhancing financial adaptability. He views this action as pivotal in upholding the United States’ position as a leader in technological progress.

Gaetz stated that:

By enabling taxpayers to use Bitcoin for federal tax payments, we can promote innovation, increase efficiency, and offer more flexibility to American citizens.

This proposal aligns with recent progress in the sector. Despite SEC Chair Gary Gensler raising concerns regarding potential risks to investors and capital markets, the U.S. House of Representatives approved the Financial Innovation and Technology for the 21st Century Act in May 2024 with bipartisan backing.

Chairman Patrick McHenry said:

FIT21 provides the regulatory clarity and robust consumer protections necessary for the digital asset ecosystem to thrive in the United States. The bill also ensures America leads the financial system of the future and remains a hub for technological innovation.

While many in the industry saw the SEC as a hurdle to broader acceptance of digital assets, the recent hints from the SEC about potentially greenlighting spot Ether ETFs have taken observers by surprise, suggesting a potential change in the regulatory environment. Nevertheless, Gaetz’s proposal for a Bitcoin tax bill is an important contribution to the crypto regulation conversation.